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Starting Up the Broadband Economy

On the eve of the Telecom Prom, we still have a long way to go to fix the lack of competitive choices for broadband access.

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Tonight is the night many in Washington, D.C.’s tech circle look forward to all year long — the FCBA Chairman’s Dinner. The Federal Communications Bar Association’s annual fete — also known as the Telecom Prom — is the one opportunity FCC Chairman Tom Wheeler has to poke fun at his fellow policymakers and industry colleagues, and in a year dominated by a momentous open Internet order (and on the very eve of oral arguments in that order’s court challenge) we imagine the jokes pretty much write themselves.

But while the Telecom Prom is a time for lighthearted humor, it is also a time for celebration. Under the guidance of Chairman Wheeler, the FCC has accomplished a tremendous amount in the name of broadband competition. The entrepreneurs and investors we work with here at Engine are busy building the Internet economy, and they rely on the FCC now more than ever to protect that economy against the anticompetitive control of the incumbent broadband gatekeepers.

The past year has been a good year for policies that ensure everyone can access the Internet on fair, open, and competitive terms.

We believe that there is almost nothing more important that policymakers can do to help the startup economy than work to improve the country’s Internet ecosystem. Broadband Internet access is the central input in virtually all of the incredible growth in the nation’s tech sector. The past year has been a good year for policies that ensure everyone can access the Internet on fair, open, and competitive terms. From net neutrality to the breakdown of the Comcast-Time Warner merger, the FCC is working hard on behalf of the Internet economy to prevent an already top-heavy ISP marketplace from getting a lot worse.

While these policies are hugely important to the continued success of the startup economy, we still have a long way to go to fix the lack of competitive choices for broadband access. These massive companies still wield control over nearly all the inputs to broadband competition, including high-capacity broadband lines. Every smartphone, tablet, laptop, desktop, telephone, credit card reader and ATM must use one of these incumbent-controlled paths to get to the Internet. And these providers can charge whatever they want because they hold near total geographic monopolies. Consumers and businesses simply have no choice.

Without adequate competition, the dominant ISPs have no incentive to invest in deploying new networks or upgrading existing networks.

Without adequate competition, these dominant ISPs have no incentive to invest in deploying new networks or upgrading existing networks. They use their monopolies to overcharge American businesses by at least $10 billion a year, amounting to an average annual profit of over 100 percent, and instead of investing it back into their network as they’ve said they would time and time again, they use these funds to purchase other companies. This only further consolidates the market, and leaves us with fewer tools with which to innovate, chilling the prospect of attracting capital for those innovations. It’s a hard thing to explain in Silicon Valley as the startups Engine works with must innovate and compete each and every day in order to stay in business.

When it comes to startups, every single dollar counts, and the cost of carrying the exorbitant prices for broadband access is a real deterrent. A recent report from the Internet Innovation Alliance found that access to quality broadband can save startups an average of $16,000 annually. For the archetypal young students starting a business in their parents’ garage, $16,000 makes all the difference between moving forward with their dream or throwing in the towel. Increasing competition ensures America’s entrepreneurs can use their limited funds building their businesses, rather than lining the pockets of a few huge incumbents.

We urge the FCC and Chairman Wheeler to ensure that our voices are heard, and that real reform happens now.

This is precisely why we’ve joined with a broad sector of the broadband world to help cure the underlying “disease” of this control over broadband access. The campaign is called Competify, and while the branding is lighthearted, the message is very serious. Better, faster and more affordable broadband networks fuel the startup economy, and the only way we’ll get there is through more competition. And we need policymakers to help to us do it.

Chairman Wheeler has repeatedly indicated his intention to bring much-needed relief to the American businesses struggling under the weight of these overcharges, and we fully support him. This relief will lower the costs of launching businesses, which will lead to a cycle of more startups, more jobs, and more innovation. It is time for the FCC to finish the job it has so admirably taken on: Building a robust, competitive Internet economy.

We urge the FCC and Chairman Wheeler to ensure that our voices are heard, and that real reform happens now. America’s entrepreneurs are counting on it.


Evan Engstrom is the policy director at Engine, a nonprofit that supports the growth of technology entrepreneurship through economic research, policy analysis and advocacy on local and national issues. Reach him @evanmengstrom.

This article originally appeared on Recode.net.